Government Introduces Vocational Education and Training Student Loans Bills Package

Monday 17 October 2016 @ 11.40 a.m. | Legal Research | Taxation

The Federal Government has introduced three bills as part of a package to overhaul the vocational education loan system.  The VET Student Loans Bill 2016, the VET Student Loans (Charges) Bill 2016 and the VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016 were all introduced into the House of Representatives on 13 October 2016.

The Bills package axes the previous VET FEE-HELP scheme and will introduce a new scheme, to be known as the VET Student Loans program, from 1 January 2017.  Among other things, the new scheme will limit the courses that will be eligible for a loan – previously, all diploma level courses were automatically covered.  The Government has released a draft list of 347 courses that it proposes will be eligible, with consultation on the list open until 23 October 2016.

Announcing the scheme earlier this month, Minister for Education and Training Simon Birmingham said in a press release:

“The Turnbull Government’s new VET Student Loans program will return integrity to the vocational education sector and deliver a win-win for students and taxpayers through a range of protections…

We will close off new loans under VET FEE-HELP at the end of 2016, with the new program including course restrictions for providers, loan caps to begin from January 2017 and student engagement requirements commencing from mid-2017.

Central amongst our new program is the need for providers to go through a rigorous application process and extensive monitoring and evaluation to ensure they are delivering education that students and employers value and that taxpayers are willing to continue supporting.”

VET Student Loans Bill 2016

According to the Explanatory Memorandum, the new loans program will:

  • Limit courses eligible for loans and limit subcontracting of training;
  • Introduce loan caps for eligible courses with the initial loan caps to be $500, $10,000 and $15,000 (although some courses may be exempted);
  • Enable the urgent suspension of a provider; or withhold loan amount payments if the provider is suspected of not complying with the scheme;
  • Ban brokers and agents from recruiting students in relation to loans unless the student has expressly consented;
  • Scrutinise potential providers more closely; and
  • Introduce an application fee for bodies to become approved course providers, and require existing providers to have to apply to be approved under the new scheme.

VET Student Loans (Charges) Bill 2016

This Bill sets out the framework for imposing a charge on approved course providers as a tax.  The amount charged will be prescribed by regulations.  The Explanatory Memorandum says:

“The Charges Bill imposes the charge on providers to fund the VET student loan program including the costs incurred by the Commonwealth in administering the program, data collection and analysis as well as compliance and enforcement activities.”

VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016

This Bill deals with the transitional arrangements between the two schemes and consequentially amends a number of other pieces of legislation.  

According to the Explanatory Memorandum, these amendments will:

  • close down access to VET FEE-HELP assistance to new VET providers from 5 October 2016; and
  • close down access to VET FEE-HELP assistance to new students for units from 1 January 2017; but
  • enable existing and active students enrolled with existing VET providers to continue to access VET FEE-HELP assistance for units that start before 1 January 2018.

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VET Student Loans Bill 2016, VET Student Loans (Charges) Bill 2016, VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016, Explanatory Memorandums & Second Reading Speech - available from TimeBase's LawOne service

Media Release: New VET Student Loans a win-win for students and taxpayers (Senator the Hon. Simon Birmingham, 05/10/2016)

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